Re:
lets asume we contribute 2 billion of art and the 400 million of debt to the prefeered partnership , the kids contribute 300 milliom of art and 300 of investments assets. ) enought to pay the coupon ). for a couple of hears. we then exchange the preferred interest for promissory note and rent art at afr plus 2,5. . no sales tax. . then we grat the current shares to gice the kids the upside. presto chango , i go on vacation.
You "go" on vacation? Where have you been? ;)
The rent is subject to sales tax.
Leon will have to pay a $90 million per year in rent.
When GRAT expires, presto, Leon loses his income flow on the cashflow.
- I don't see how this is better than my very first proposal of a freeze partnership, where he gets the preferred return for life,
I am happy to discuss. Alan
no , not if in my example we have a billion of art and I billion of stock, and the stock doubles. he gets back all his stock and the art goes.. you are right about the sales tax on rent
Could you describe your plan, step by step, with a clear description of who is doing what, identifying the debt (obligor and obligee? Thanks.
IRS Circular 230 disclosure:
To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. kdcral tax advice contained in this communication (including any attachments) is not intended or written to be used. and cannot be used, Ibr the purpose of(i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another parry any transaction or matter addressed herein.
Alan S. Halperin I Partner Paul, Weiss, Ritkind, Wharton & Garrison LI.P